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Good Growth Continues for the U.S. Structural Pest Control Market MENDHAM, N.J. — The U.S. structural pest control industry generated an estimated $6.815 billion in total service revenue in 2012, a 4.5 increase from the $6.524 billion measured in 2011, according to a new report from Specialty Products Consultants, Mendham, N.J.

The top three U.S. service providers — Orkin, Terminix and Ecolab — represented 40.4 percent of the total industry revenue for the termite and general pest market segments this past year.

Service revenue derived from controlling bed bugs declined two percent from the prior year, bringing the total revenue earned to $401 million. Single-family homes and apartments were the primary leading types of accounts pest control operators treated for bed bugs. Nearly one-third of those servicing accounts for bed bugs report employing a monitoring device as part of their service. Nationwide, PCOs reported an average charge for a bed bug treatment of $587, down 2.2 percent from the prior year. The average charge was highest in the Northeast and lowest in the West region. The median charge nationwide was $500 for a bed bug treatment.

Nationwide, pest control operators reported good growth in both residential (+6.8 percent) and commercial (+2.9 percent) service revenue over the prior year. Total service revenue generated from termite work, including renewal fees, was up 1.5 percent from that measured in the 2011 market study.

Nearly 38 percent of the pest control operators surveyed reported using social media to advertise and promote their pest control business. Facebook, LinkedIn, Twitter and YouTube were the leading social media platforms respondents used.

Total manufacturer level revenue increased 5.9 percent this past year to nearly $500 million. This is the third year of manufacturer level sales growth, following the 2007-09 recession. Manufacturers experienced an extraordinary increase in sales of insecticides, which was attributed to the mild winter weather in 2012. Sales of termiticides were down as a result of generic price pressure on the fipronil products, SPC research found.

More than 800 owners or managers of pest control companies were interviewed for this study. The market report forecasts pest control service revenue through 2014 and corresponding pesticide product category sales through 2017. The impact of the commercial and residential real estate market, mosquito and wildlife management services, changes in distribution, and pest control operators’ expectations for 2013 are just a few of the topics analyzed in this year’s report.

Specialty Products Consultants provides market research studies to the specialty pesticide industry. The 2012 season market report is the 13th edition of “A Strategic Analysis of the U.S. Structural Pest Control Industry.” Learn more at www.spcresearch.com.

NPMA, USDA Reach Agreement on Definition of ‘Urban Rodent Control’WASHINGTON, D.C. — In May, the National Pest Management Association and U.S. Department of Agriculture’s Wildlife Services reached agreement on the definition of the term “urban rodent control,” which, for the first time, establishes meaningful parameters as to the work USDA-WS can and cannot perform.

The issue stems from a 1987 law that authorized USDA-WS to work at non-agricultural settings. Although the primary intent of the legislation was to permit WS to control birds at airports and engage in rabies control initiatives, the language was written broadly and authorizes almost any type of vertebrate work imaginable, including “urban rodent control.”

NPMA had long sought to have an official, enforceable definition of the term “urban rodent control.” Earlier this year, NPMA turned to a legislative solution, as defining “urban rodent control,” became one of two key components of the Pest Elimination Services Transparency & Terminology (PESTT) Act (H.R. 730), legislation introduced in the U.S. House of Representatives in February by Rep. Mick Mulvaney (R-S.C.) and Rep. Kurt Shrader (D-Ore.).

Gene Harrington, vice president of government affairs, NPMA, said, “Essentially the PESTT Act gave us leverage and standing to be able to negotiate an administrative solution to the competition issue.” Harrington added that as a result of this agreement the PESTT Act (H.R. 730) will go dormant.

Harrington said NPMA will continue working with members of Congress and Wildlife Services to codify and implement the definition, but the WS letter provides the broad framework for what NPMA was working towards.

“Certainly this is just the beginning steps, but the deal itself is notable, and it would not have been possible if PMPs hadn’t come to Legislative Day and raised awareness,” he said. “Really we went from a nice comfortable jog to a full-out sprint as a result of Legislative Day. We built up a great deal of momentum and it made sense for Wildlife Services to reach out to us.”

In the coming weeks, Harrington said USDA-WS will publish a federal register notice making this definition part of the public record. — Brad Harbison

*Visit “Online Extras” on the PCT Online homepage to view a letter USDA-WS wrote to House Agriculture Committee Chairman Frank Lucas of Oklahoma outlining the agreement.

Waltham Services’ Richard Berman Retiring After 44 YearsWALTHAM, Mass. — Richard Berman, longtime technical director at Waltham Services, retired at the end of May. Berman had been with Waltham Services since May 1969.

“I still love coming to work, but it was time,” he said. “I have a touch of arthritis in my knee. Plus, I wanted to do some traveling with [wife] Myrna, and spend time with the grandkids.”

Berman was recognized at a special dinner in his honor attended by colleagues past and present, including Clarke Keenan, former majority owner of Waltham Services, and Tom Walters, division president of Rollins, which purchased Waltham Services in July 2010. A company barbecue also was held in Waltham so that service technicians and sales and customer service representatives could send their well wishes to Berman.

A graduate of the University of Massachusetts, Berman was introduced to the industry by an apiculture (study of bees) professor, who was friends with Richard Keenan, longtime Waltham majority owner and president of Waltham Services.

“He hired me on May 26, 1969. Myrna and I were married on June 15, 1969, and he gave me two weeks paid vacation. I knew I was in the right place,” Berman said.

Berman came on board at an interesting time for the pest control industry. In 1972, the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) was revised, greatly expanding EPA’s authority to oversee the sales and use of pesticides. Participating in the pest control industry’s evolution the last 40-plus year has kept the job exciting, he said. So has watching others succeed. “My M.O. has always been to provide internal support, and watching our customer sales and service reps and service technicians do well is what gives me a good feeling.”

Berman said he is working on an arrangement whereby he will work for Waltham Services as a part-time consultant, dedicating a few days a month to the company starting later this summer.

LIPCA Insurance to Run New ProgramsBATON ROUGE, LA. — Effective July 1, LIPCA Insurance entered into an agreement with Berkley Underwriting Partners, a member company of W. R. Berkley Corporation, to administer its pest insurance product to be written on StarNet Insurance Company and Gemini Insurance, another W. R. Berkley Corporation member insurance company. All are rated A+ (superior) by A.M. Best Company. StarNet is one of the longest running national pest insurance carriers in the United States, the firm said.

LIPCA has offered protection to its pest/lawn insureds since 1985. “LIPCA has been around for a very long time making sure its insureds have the best protection possible. The added coverages that LIPCA will be able to write with StarNet and Gemini will only make the program stronger, especially with LIPCA’s knowledge of pest and lawn exposures,” said Doug MacPherson, president of LIPCA Insurance.

LIPCA says it will continue to handle general liability claims. “What separates us from most, if not all competing programs, is the attention to detail and expertise in handling general liability claims for the pest and lawn industry. This is all that we do,” says Andy McGinty, EVP/COO of LIPCA. “Our loss ratios while handling the claims have been excellent, especially when we had the authority to underwrite the insureds. Not everyone is eligible to be with the LIPCA National Pest and Lawn program. We want the best pest and lawn companies to be with the best pest insurance program. But we also know how to work with those insureds with past claims to make them better. If they are willing to listen, so are we. The difference with LIPCA is being owned by the pest industry and actually caring for its members.”

The LIPCA National Pest and Lawn Program now has access to A.M. Best Company A+ rated admitted and surplus lines papers. LIPCA is a member of numerous state pest associations and NPMA. For more information email info@lipca.com.

Gene Wood, Former University of Maryland Entomology Professor, DiesUniversity Park, Md. — Francis E. “Gene” Wood, an extension entomologist and professor at the University of Maryland, died on May 18, at age 80. Wood died from complications of Lewy Body Dementia (LBD), a pernicious disease that attacks both cognition and mobility.

A native of Jefferson City, Mo., Wood earned a BS and MS from the University of Missouri and a Ph.D in entomology from the University of Maryland.

As an extension entomologist and professor, Wood helped educate the pest control industry and the public they serve, and also conducted applied research. Using his skill as a scientific illustrator, he produced scores of publications and drawings covering the identification, biology and control of pests. His illustrations soon will be available on the University of Maryland Department of Entomology website.

In the 1970s he began transforming a loosely organized group of Maryland “exterminators” into pest management professionals by providing training leading to certification at his annual Interstate Pest Control Conference, which is still hosted today by the Entomology Department. A major research effort of his was documenting the early detection of chlorinated hydrocarbon pesticide resistance in the German cockroach. In the 1980s Wood adapted the agricultural concept of Integrated Pest Management (IPM) to reduce pesticide use in dwellings by developing trapping, baiting and harborage reduction techniques to manage exploding German cockroach populations in apartment buildings. Large demonstration projects were conducted with Baltimore City public housing and the National Institutes of Health’s animal care facility, which still uses this program.

In lieu of flowers, the family asks that donations be made in Wood’s name to either the non-profit organization Literacy West Virginia, to support establishing a literacy program in Hardy County, W.Va., or to the University of Maryland Foundation, to support student scholarships. Checks for the literacy program should be made out to Literacy West Virginia and sent to Judy Azulay, PO Box 522, Union, WV 24983. Checks for the entomology scholarships should be made out to the University of Maryland Foundation, with a note on the check “For Steinhauer Scholarship,” and sent to the U of MD Department of Entomology, Rm 4112 Plant Sciences, College Park, Maryland, 20742.

Dr. Jamel Sandidge recently joined Rockwell Labs as a research entomologist. Sandidge earned his Ph.D. in ecology and evolutionary biology from the University of Kansas, and has been a consultant on the subject of brown recluse spiders since 2001. He also operated a general pest control business in the Kansas City area from 2004 to 2009.

Team Too Termite & Pest Control named Jeremiah Patin general manager for the company’s corporate office in Corona, Calif.

Klein

Environmental Science, a division of Bayer CropScience, announced that Ryan Klein joined the company as area sales manager for its professional pest management business. Klein will be responsible for the Kentucky, Ohio, Indiana and Michigan territory and will manage two distributor accounts.

Craft

Travis Craft recently joined Dublin, Ga.-based Allgood Pest Solutions as the company’s chief financial officer. Craft has 12 years of experience in both the public and private sectors as a certified public accountant.

FMC Professional Solutions recently appointed Bob West as national pest segment manager, and Richard Spigler II, BCE, as pest market specialist for the Northeast.

West will lead the U.S. pest sales team, focusing on delivering solutions for the pest management industry, FMC said. Spigler will offer sales and technical support to PMPs, distributors and other FMC channel partners throughout New York, New Jersey, Pennsylvania, Maryland, Delaware, West Virginia and all of New

Massey

England.

The Edyth Bush Charitable Foundation recently elected Harvey L. Massey to its board of directors. Massey is the owner and CEO of Massey Services in Orlando, Fla.

Dow AgroSciences named Natalie Holt as the sales representative for the Sentricon System in Ohio and Eastern Michigan. She will be based in Columbus, Ohio.

West

As well, a new Sentricon sales territory has been created in the southern United States. Brandon Crain was named the representative for this new territory, which covers Mississippi, northern Louisiana and southern Alabama. Crain will be based in Jackson, Miss.

FEMO Products, a manufacturer and distributor of mosquito control systems, announced that Barney Rinaldi has been named the company’s new president.

James Herrmann joined the Zoëcon Professional Products division of Central Life Sciences as director of marketing.

Spigler

Joe Wilson, CEO of the Fredericksburg, Va.-based PermaTreat Pest Control, recently received the Fredericksburg Regional Chamber’s Joseph L. Argenzio Award. The award recognizes volunteer work on behalf of the Fredericksburg Regional Chamber of Commerce, and is named for the late Joe Argenzio, the youngest infantryman to land on Omaha Beach during the D-Day invasion in June 1944.

NPMA Announces Results of 2013-14 Board ElectionFairfax, Va. — The National Pest Management Association announced the results of the annual board election. The following is a list of board of directors for the 2013-14 year:

RK Environmental Announces New Venue, Speakers for Food Safety Event WESTWOOD, N.J. — A five-star venue, expanded program and well known speakers will highlight RK Environmental’s “Food Safety and Pest Management 2013,” the company said. The seminar, broadened this year to encompass both the food safety and pest management industries, will take place Oct. 2-3, at the Trump Taj Mahal Casino Hotel in Atlantic City, N.J.

Keynote speakers include Al St. Cyr, head of food safety education for AIB International, who will present on the current state of third-party food safety audits, as well as the Global Food Safety Initiative and new AIB standards. Rodent control expert Bobby Corrigan will discuss advanced techniques for rodent management in a food environment. Other speakers include Lowenstein Sandler attorney Robert Towey, on the legal aspect of food safety; and entomologist Jeff Tucker will discuss insights on flies within the food environment. Other experts will cover recalls, the Food Safety Modernization Act, and other subjects relevant for anyone working in the food safety/pest management industries.

The seminar will feature an evening networking event as well as an exhibit by suppliers who will present the latest products and services exclusively for the food and pest management industries. Food industry attendees can earn CEUs and recertification credits will be offered for certified pesticide applicators. For more information visit www.rkenvironmental.com or call 800/996-4402.

Allergy Technologies Expands Distribution AMBLER, Pa. — Allergy Technologies announced the expanded availability of its ActiveGuard Mattress Liners throughout the United States through new deals with several distributors, including Target Specialty Products, Pest Management Supply and Ehrlich Distribution.

“Based on the increased demand for ActiveGuard throughout the country, we are pleased to have widened our distribution so that greater numbers of PMPs can now easily enjoy the product’s availability,” said Joseph Latino, chief operating officer for Allergy Technologies.

Team members of General Pest control of Alabama. The firm was recently purchased by Arrow Exterminators to operate under Arrow's Stark Exterminators brand.

Atlanta-based Arrow Exterminators recently acquired Birmingham-based General Pest Control of Alabama, a full-service company specializing in residential and commercial pest and termite control. General Pest Control will be operated under Arrow’s Stark Exterminators brand, launched late last year.

Castleton, N.Y.-based Catseye Pest Control joined the U.S. Environmental Protection Agency’s (EPA) Pesticide Environmental Stewardship Program (PESP). The voluntary program forms partnerships with pesticide users to reduce potential risks associated with their use.

Orkin recently acquired BDD Inc., a franchisee of Hydrex Pest Control Company. BDD provides pest control service to a broad customer base in Orange and Los Angeles Counties in California.

The team at Sri Lanka's Exterminators, celebrating 15 years in business

Sri Lanka-based Exterminators recently celebrated 15 years in business. The company said its drive and passion has led them to become a leading pest control company in Sri Lanka, having won several awards for business excellence and entrepreneurship.

Loyal Termite and Pest Control, Richmond, Va., recently received two awards. The company was named a 2012 Angie’s List Super Service Award winner, and was voted Richmond Magazine Reader’s Choice No. 1 pest control company.

Hearts Pest Management, San Diego, recently received the IPM Innovator Award from the California Department of Pesticide Regulation. Hearts provides pest management services to residential and commercial clients, and other IPM-based services to all its customers.

Buckingham Pest Control, St. Louis, Mo., has been accepted into the 2013-14 edition of the Verified Service Reports Homeowners’ Guide of Quality, Reliable Contractors and Profressionals. To make the guide, a business must pass Verified Service Reports’ verification process in St. Louis or Phoenix, where Verified Service Reports currently has branches.

Pest Invasion, an annual food industry seminar hosted by McCloud Services, is one of the few pest management seminars with a focus on the food industry, and combines hands-on training with timely topics important to the food industry, McCloud Services said.

The seminar focused on the increasing demands for improved food safety, with several speakers addressing the importance of pest management in food safety. Topics ranged from rodent control updates to fumigation alternatives. Speakers included Dr. Robert Corrigan of RMC Pest Management, Dr. Steven Kells of the University of Minnesota and Dr. Tom Phillips of Kansas State University. McCloud Food Safety Manager Dave Pettigrew and Technical Director Patricia Hottel, presented information on regulatory updates and third-party audits. Gene White of Rose Pest Solutions closed out the conference with a presentation on overwintering pests.

Key takeaways included:

Dr. Corrigan recognized the importance of quality rodent control as an element of food safety by stressing the relationships between food-borne illness, rodents and food contamination.

Dr. Kells instructed the audience on the importance of inspection, as well as follow-up inspections after insecticidal treatments. He has utilized this procedure to help uncover the sources of stored product pest infestations.

Dr. Phillips reviewed a variety of research that has been performed at Kansas State University and Oklahoma State University. The research focused on stored product pests and fumigant alternatives. Phosphine fumigant resistance and strategies to prevent phosphine resistance in insects were also included in the presentation. Strategies to help prevent resistance include rotating to other fumigant alternatives.

“As we continue to serve the largest food-related brands in the U.S., it is important to address key issues and topics affecting today’s food industry,” said Chris McCloud, president and CEO, McCloud Services. “With a record attendance, Pest Invasion continues to provide key information critical to our industry and we are proud to have hosted another successful seminar.”

University of Kentucky Announces 43rd Annual Program

Lexington, KY. — The 43rd Annual University of Kentucky Pest Control Short Course will be held Oct. 1-3, in Lexington, Ky. The conference includes a money-back satisfaction guarantee. Topics include safeguarding the family business, finding and keeping good employees, the business of bed bugs, battling brown recluse spiders, termite lessons of a lifetime, suburban mosquito control, a day without pesticides, managing mystery bites, the bed bug house of learning, and sessions on managing rodents, flies, bats and yellowjackets. Featured speakers include Jerome Goddard, Brian Forschler, Paul Hardy, Norm Cooper, Greg Clendenin, Donnie Blake, Jim Fredericks, Kathy Heinsohn, Dan Collins, Cisse Spragins and Jamel Sandidge.

As the leader of your organization, you have the responsibility to stay on top of finances, operations, marketing, customer service and everything in between. The performance of each of these areas individually fuels the overall health of your business, so you can’t afford to let any one of them slide.

But just because your business is multifaceted doesn’t mean it has to be complicated. Mike Rottler, president of Rottler Pest & Lawn Solutions in St. Louis, believes that keeping things simple is not only possible but preferable. “We tend to make business more complicated than it needs to be, when what we really need to do is get back to basics, focus on what’s important and not let distractions get in the way. My company has become much more successful since I stopped getting caught up in day-to-day minutiae and instead channel my efforts into monitoring key areas.”

Rottler defines these key areas in this article, sharing insights into how to track their performance and ensure continuous improvement. He credits peers across the industry for contributing to these ideas. “We are fortunate to have so many bright people in our business. Every time I interact with someone, I pick up new ideas,” he says. “I’ve boiled the high points down to a basic set of metrics that I rely on to keep my business strong.”

Structure.
Before you can wrap your arms around your business performance, you need to know who’s who. Rottler said, “You probably do know it all in your head, but it is truly important to put an organizational chart down on paper — for two reasons: (1) regularly updating and reviewing your org chart helps you keep tabs on how many technicians your managers are supervising, where there might be overlap or where you might need an additional staff member, and (2) sharing the chart with your employees helps them see potential career paths for themselves and lets them know to whom to go with certain questions or issues — otherwise, everyone comes directly to you for everything.”

Marketing.
Rottler defines marketing as “anything that makes the phone ring and gives us an opportunity to sell” — TV and radio spots, social media, truck wrapping, etc. How do you determine where you get the most bang for your marketing buck? Track your leads and calculate the cost per lead.

Say, for example, you run a campaign on TV, radio and social media. When calls come into your office, make sure your representatives ask every caller where he or she learned about your company or the special offer advertised. Record this information and examine the collective results. This data will enable you to determine which vehicles were effective in drawing leads. You can drill down to the ZIP code level in your results to see which communities are most receptive to your marketing as well.

Of course, you can’t judge the effectiveness of marketing on one campaign. Often it’s repetition over time that inspires a prospective customer to pick up the phone. Plotting your results over time can help you see how leads trend through times of heavy advertising versus light or no advertising.

Net Promoter Score Uncovers Trouble Spots

Over the past few years, the Net Promoter Score (NPS) has become a widely used performance measure particularly among Copesan Partners like Rottler Pest & Lawn Solutions. This tool helps PMPs gauge their effectiveness in satisfying customers. This score centers around a pivotal question posed to customers: On a scale of zero to 10, how likely are you to recommend us (or this product/service/brand) to a friend or colleague?

The customer’s answer to this question places him or her into one of three categories: a promoter (9-10 score), who is so satisfied with the company that he or she would recommend it; a passive (7-8 score), who is relatively satisfied but not enthusiastic about the company; or a detractor (0-6 score), who is dissatisfied — possibly dismayed with — the organization. When a detractor emerges, Rottler’s team calls that customer immediately to resolve the issues and restore a positive relationship.

He is confident the NPS keeps his team on target. “Since 2010, we’ve been enlisting a third-party research firm to call and survey our customers each quarter, and we share the results with the technicians so that they know how they’re performing in their territories,” he explains. (In the course of a year, 50 to 60 of each technician’s customers are surveyed.) “They understand that getting rid of pests is just the ante, that the real measure of their performance is how their customers feel about the service they’re delivering. It all goes back to the concept of simple is better: If your customers are happy, then you’re in great shape. If they’re not, then you need to re-examine your customer service and step up your efforts.”

Customer Service.
Your call center plays a critical role in new business development and account retention. The most basic rule in the area of customer service is to be appropriately staffed for the volume of calls that come into your office. If a potential customer is put on hold for too long, he or she is likely to hang up and phone your competitor instead. This can become a particularly sticky issue when you enter a period of intensive advertising. If you’re promoting a special offer and your office is flooded with calls, are you equipped to handle all of them?

Tracking dropped calls means installing call-center technology if you don’t have it already, but it’s well worth the investment, says Rottler. “When we first looked at our dropped-call rate, we were extremely disappointed to see 14 percent,” he says. “We did some fast work on our staffing and efficiencies, though, and got this number down to 1½ percent fairly quickly [2 percent or below is Rottler’s goal]. Once we got that rate down, our leads jumped.”

Also vital to your success is ensuring that your customer service representatives understand how to convert a lead to a sale. Copesan University training, one-on-one training with the technical director and field ride-alongs prepare the Rottler CSR team for duty. They know that their performance will be measured in terms of how many calls they answer, how many they drop and how many they convert to sales. Each year they are charged with improving these scores over their past year’s performance.

Sales.
The sales side of the business can incorporate a variety of players — inspectors, technicians and managers, in addition to CSRs on the phone. The bottom line to measuring your effectiveness in this area is setting aggressive sales goals and diligently tracking your progress toward them.

In Rottler’s world, full-time inspectors carry the lion’s share of the sales load. They work toward monthly sales goals and strive to bring in more recurring revenue than one-time accounts. Recurring revenue, says Rottler, is what has enabled Rottler Pest to grow faster than its competitors. The sales team’s performance is measured in terms of the revenue they generate and how that amount compares to their monthly goal, their closing ratio and the type of sale. Like CSRs, new goals are set based on immediate past performance so that the bar is continually set higher, challenging the team to exceed sales expectations.

Service.
Keeping close tabs on the all-important service area ensures that your customers are satisfied with the work your technicians are doing for them. First look at the number of stops each technician is completing. If this number is too low, then revenues are being sacrificed. If it’s too high, then quality is being sacrificed. Watching revenue numbers can be indicative of whether your technicians are achieving the right balance, too, but stops per month is the most accurate guide, advises Rottler.

Skips, cancels and callbacks are important, too. If one of your technicians has an inordinate number of skips, then he or she is not clearly communicating the importance of the service. Cancels are a red flag of dissatisfaction; if this number is higher than your comfort level, try to identify and correct the underlying issues. As for callbacks: If you’re seeing a lot of these, it’s probably time to have your technicians brush up on your company’s treatment protocols with some additional training.

Accounts Receivable.
Are your technicians asking for the money? You’ll know they’re not when your receivables become inconsistent. Track them every month as a percentage of revenue, identify the territories that are lagging and have a discussion with those technicians about the importance of completing the service call by collecting. “Sometimes technicians develop bad habits; not asking for the money is one that’s particularly important for you to watch for,” says Rottler.

Rottler also asserts that receivables past 30 days are likely to have service issues attached to them. “Accounts that are 30 or 60 days behind in payment signal something’s wrong,” he says. “Have your accounts receivable representative call these customers and ask, ‘Were you happy with the service?’ If the answer is yes, follow up with, ‘We notice your account is overdue. May we collect payment today?’ If the answer is no, your rep can find out what the issue is and move toward resolving it.”

Accounting.
Other financial measures fall into the area of general accounting. Rottler gauges the financial health of his company by using trailing 12-month snapshots for everything from material and equipment costs to net income, net profit and revenue per full-time equivalent (FTE).

“We share our numbers with our employees so that everyone has a transparent view of how the company is performing,” he says. “They understand that the more efficient we are in containing costs, the more profits we have to spread around. So where you might have gotten pressure from employees saying, ‘Hey, we need another hire to help us out with the workload,’ now you have employees who are willing to work harder so they can keep more of the profits they help us earn.”

I once heard a quote that has stuck with me, perhaps more than any other relative to my line of work as a mergers and acquisitions advisor. First some context:

I was in a closing involving the sale of a client’s business. The client, by all accounts, was a very successful business person that had started, built and sold numerous businesses. I hadn’t been involved in any of his previous transactions; this was my first opportunity to have represented and advised him. I could tell that he had done quite well and was independently wealthy. He was not showy or lavish — anything but, in fact — but was very sensible and extremely fundamental, and perhaps for that reason more than any other, I found it fascinating to be in his company. I could tell that other people enjoyed being around him as well.

During the closing, as various documents were circulating, and there were those inevitable moments of down time, one of the lawyers asked my client a question, of which the answer so perfectly addressed one of the major challenges in my line of work. The lawyer asked: “If you had to point to one thing that has led to your success in business, what would that be?” The man answered: “I’ve always sold my businesses too early.”

How prophetic, I thought. And by the raised eyebrows in the room, others felt the same way. Bearing an emotionless look, you could tell he was dead serious. He then expanded his thought, adding that in hindsight, he had most always sold businesses he owned before they reached their peak in market value. However, it wasn’t until he had sold a few of his businesses that this became a calculated strategy of his. You see, he realized in time that he always generated excellent returns on his investments. In fact, he had never lost.

The man would follow a business after he sold it, as well as the industry it was in, so he knew in hindsight if whether he had held the business longer, he could have sold it for even more money. But he was also keenly aware, unusually so I’d say, that business and markets can change on a dime; that they’re inherently risky, and that there is a direct correlation between risk and reward. So, he explained, he got scientific about it: by selling early, he hypothesized, he made a stellar return with substantially less risk. Alternatively, with respect to each of the businesses he had sold, had he held them until their approximate peak in value, he estimated he likely would have fetched another 10 or 15 percent. But, that’s assuming he would have guessed correctly the timing at which the business was at its peak value, which can only be known with the benefit of hindsight.

In holding the business longer, there’s an inherent risk he would have had. Removing that added risk, he reasoned, was worth something. And finally, and I think most profoundly, he took into account what the impact might be if he held onto a business too long and sold too late. That possibility, to him at least, was far more painful, than the likelihood that he might have left some money on the table.

Counter-Intuitive.
Business owners ask me all the time: “When is the right time to sell?” By now, as you can perhaps infer, my answer these days is this: “Too early.”

It’s a fabulous answer. But if that’s the case, why do most business owners sell too late? Most business owners sell either in a down market or when their health or age dictates retirement. Why? Because as human beings, that’s our natural instinct. We flee from things when pending doom is on the horizon, and we gravitate to things when the future looks bright — this is the “buy high, sell low” phenomenon. It’s what everybody does — buy when everybody else is buying, and sell when everyone else is selling. Yet, history has proven, indisputably, that people who do the opposite accumulate the majority of the wealth. I can assure you that the recession we’re just coming out of, for instance, created a new flock of multi-millionaires despite the toll it took on the masses. In 2008 and 2009, we saw the mass exodus from stocks and real estate; everyone was selling. And those that were buyers then, while everyone else was selling, made out in a big way. These are extreme examples, of course, but similar circumstances occur all the time on a much smaller level.

Cash rich.
So how can you apply this sound judgment in today’s market? Well, let’s take a quick look at what’s happening in this current market. First, the market is loaded with liquidity, with corporations and investors lined with record amounts of cash. These folks have limited options for where to deploy this cash. Banks are paying barely any interest, and while companies are hiring, I wouldn’t say they’re doing so at robust levels. Organic business growth remains hard to come by, thus somewhat stifling capital expenditures. Acquisitions, on the other hand, provide a perceived sound means for deploying capital and generating good-to-excellent long term returns.

To this end, many large companies and institutional and private investment firms have set aside significant budgets strictly for prospective acquisitions and are doing little short of mandating that this money be spent. On the other hand, while demographic trends continue to yield enough sellers to make for a decent M&A environment, there’s not exactly an abundance of such. I suspect there will be in time, however. As we see more sellers populating the landscape, you can be sure that the scales will tilt back to a level that at best favors neither sellers nor buyers. In the meantime, we remain in the midst of a seller-friendly market.

Selling in this market represents selling early, which means winning! Mind you, that’s not to say you might not be able to sell your business for more at some point in the future. You may. But believe me, I’ve seen way too many business owners sell their businesses too late, trying to catch that elusive peak and capture every potential dollar, only to end up on the wrong side of that peak with downhill momentum working against them. As they say: pigs get fat, hogs get slaughtered.

So if you’re that business owner considering selling your business, and find yourself wondering if it’s the right time, think about it this way: You can’t do anything about the past. If you sell now, you’re more than likely not selling too late. That leaves two scenarios: you’re selling too early or at just the right time. In either case, you win!

Lance R. Tullius is managing partner of Tullius Partners, an investment banking firm that specializes in providing merger and acquisition and financial/strategic advisory services to companies operating in the pest control industry.

PCT to Host Mergers & Acquisitions Conference 2.0

Features - Business Strategy

Are you thinking about selling your business? Buying a business? Both are complicated processes best approached while armed with as much knowledge as possible--and PCT is here to help (again!)

On Aug. 14, PCT will be hosting its second Mergers & Acquisitions Virtual Conference. From the comfort of your office, you can spend the day listening to the advice of top experts in the M&A market: Paul Giannamore, managing director of mergers and acquisitions for The Potomac Company; Lance Tullius, managing partner at Tullius Partners; Tamera Dosenbach, business intermediary and consultant for A+ Business Brokers; Daniel Gordon, president of PCO Bookkeepers; John Corrigan, attorney, Corrigan & Baker; Rand Hollon, licensed broker with Preferred Business Brokers; and former NPMA President Norm Cooper, president of Norman Cooper & Associates.

So if you’re at all thinking about dipping your toes into the M&A market, this is a can’t-miss event. Registration is $99 per person, and will get you a full-day pass to attend any or all of the educational sessions. Visit www.pctonline.com/virtualevent to learn more and to register, or call PCT’s conferences division at 800/456-0707.

The PCT Mergers & Acquisitions Virtual Conference 2.0 is sponsored by Arrow Exterminators, Massey Services, Rollins and Terminix. (Editor’s note: There are still sponsorship opportunities available. If you are interested contact PCT National Sales Manager Michael Kelly at 757/233-4100 or Western Region Sales Manager Mike Zaverl at 330/523-5380.)

Left to right: Tom Myers, hanging out with a friend; emperor penguins in Antarctica; sled dogs ready for a meal in Greenland; an African gorilla; a 17-year Brood II cicada. All photos courtesy of Tom Myers.

Four baby emperor penguins waddle across an icy landscape with a piercing blue sky filling the frame. The penguins appear to consider their next move. Where to go next? It’s a unique and engaging composition, and it’s what a nature photographer seeks.

This is one of countless photographs taken by Tom Myers, owner and president of All-Rite Pest Control in Lexington, Ky., over the many years he’s spent as a photographer. Soon, the photo will be on display for thousands to see at the Smithsonian National Museum of Natural History. The photo, shown above, was recently awarded a Nature’s Best International Photography Award, and is being exhibited at the Smithsonian now until early 2014.

Getting the shot wasn’t as easy as going to the zoo.

“In the case of the penguins, we took a helicopter and landed on frozen sea ice,” Myers said, speaking of his recent expedition to Antarctica — a place where few ever set foot, but where Myers has been three separate times now. “It kind of depends on which species you’re shooting.” Myers entered the photo contest himself, which accepted about 20,000 images from photographers in approximately 46 countries. Of those, Myers’ penguins will be among the 40 on display in the museum this summer.

Myers said he became interested in photography when he was in high school. That interest continued throughout his college years while earning a bachelor’s degree in entomology from Purdue, where he took pictures of sporting events, among other subjects. His interest in nature photography eventually dovetailed with his passion for bugs. His first published photograph came in an extension office publication.

His work has also graced the cover of this very magazine several times — last month’s Fly Control Issue, for instance.

What’s Your Passion?

Besides pest control, what do you enjoy doing? Volunteering? Cooking? Hunting? Running? Let us know! PCT would like to talk to you for a possible upcoming feature article. Email PCT Associate Editor Bill Delaney at bdelaney@giemedia.com and let us know what you’re passionate about!

Back to Antarctica, Myers’ award-winning photograph came during an “intense” trip to the desolate continent. “We’ve gone down at different times,” Myers said. “If you’re going during the summer, it’s almost 24 hours of daylight. You can be out from 4:30 a.m. and continue [shooting photos] until 11 p.m., because you have all that light.”

Antarctica isn’t the only exotic locale Myers has visited. He’s shot sled dogs in Greenland, gorillas in African rainforests and more. He said he is especially interested in photographing endangered species whose habitat is near the equator.

Naturally, Myers takes his share of insect photos, recently having shared with PCT a handful of new photos of 17-year Brood II cicadas. As well, for the past several years, Myers has emblazoned his company’s service trucks with some of his photos. Photos of ticks, katydids, grasshoppers, spiders and more, help All-Rite service vehicles stand out in traffic.